Iincrease in merger objection & securities class action cases

In 2017, merger objection cases saw a 28 percent rise in the number of companies sued in 2017 from 2016

and securities class actions (SCA) rose roughly six percent in 2017.

What are the factors that could have caused this increase?

Panelists during Advisen’s most recent D&O Claims trends webinar offered their perspectives:

Machua Millett, managing director and chief innovation officer at Marsh compared data from the end of 2008 into Q1 of 2009 to data from the end of 2017 into the beginning of 2018. He noticed a commonality between the two time periods – the new administration, new president, and significant changes in terms of federal government policy – that have had effects on the stock market.

John McCarrick, partner at White & Williams LLP said the increase is related to the fact that traditional merger objection cases were brought in state court, but now they are seen in federal court.

Lastly, Kevin LaCroix, executive vice president at RT ProExec, a division of RT Specialty suggested that the increase is due to ‘emerging law firms’ which he explains “are active plaintiff firms that want market share and don’t want to have to compete against larger, more established, plaintiff firms because they feel they will lose control of the cases.”

To read more about the panelist’s insights, read Advisen author, Josh Bradford’s Front Page News article “A more active plaintiffs’ bar driving increase in securities class action litigation”.